Supplier Selection

Turning supplier information into procurement insight

Decisions and consequences go hand-in-hand. This is why having adequate, relevant information at your fingertips is a critical aspect of any decision-making process - more so when these decisions affect the operation of business and company reputation.

In procurement, the optimal goal is to manage risks and costs within a company, making it an imperative department of business. Businesses spend a significant amount of time vetting potential suppliers before embarking on a partnership, and pertinent data provides them with the right tools to make informed decisions with information that is easily interpreted by management.

However, the vetting system should not end when an agreement is reached between a business and its supplier. Intensive research and vetting on future and current suppliers should be a continual safety requirement to ensure all procurement legislation is adhered to, says Rudi Kruger, General Manager of Risk Solutions at LexisNexis Data Services, in this month’s SmartProcurement.

How can procurement prepare SMEs to engage with corporates?

“They won’t even talk to me, now” David said with a sigh, and to punctuate his mood, spread his hands on the desk in front of him in resignation.

David is a small supplier that was selected to participate in a corporate enterprise supplier development (ESD) programme. Following the completion of the 12-month contract, he was replaced by a subsequent beneficiary of the programme. David has been trying to secure a further contract with the organisation (and with other organisations), but has no idea how to engage with his prospective clients, subsequent to the ESD initiative.

It is a situation familiar to Elmarie Goosen, owner and founder of On Purpose, an organisation that provides training to SMEs to complement supplier development programmes – to prepare SMEs to engage with corporate procurement. She unpacks what procurement can do to help SMEs, in this month’s SmartProcurement.

Supplier transformation initiative in engineering and manufacturing to be introduced

A transformation initiative for small businesses in engineering and manufacturing, the Empowered Engineering and Manufacturing Initiative (EEMI), will be launched in September.

The initiative is a collaboration between Smart Procurement World, the Absa Enterprise and Supplier Development Expo and the Steel and Engineering Industries Federation of Southern Africa (SEIFSA).

The initiative is positioned as a platform for industry players to share opportunities and challenges for small and medium empowered organisations, and drive enterprise and supplier development (ESD) partnerships (funding, training, mentoring and support) and other important focus areas in this sector.

4 procurement vetting pitfalls to avoid

Mistakes in business come with the territory, but those made in procurement ought to be considered among the most detrimental to the success of an operation. Common procurement related risks include supplier issues such as delivery delays, increases in demand, quality problems and fraud. These issues are often the result of mistakes made in the procurement vetting process, Rudi Kruger, general manager of Risk Solutions at LexisNexis Data Services, told SmartProcurement.

Responsible, sustainable, green procurement means selecting products and services that have the least negative impact on the environment as well as the highest positive impact on communities and people. Profit and growth need not be compromised; in many instances it is myth that going green costs more, says Lorraine Jenks, advocate for green procurement in this month’s SmartProcurement.

Purchasing and supplier selection fails to support SMME growth in Africa

A recent study has found that although procurement is globally recognised as playing an essential role in local and regional-wide industrialisation, current purchasing and supplier selection practices do little to support SMME growth on the continent.

The study found that while over 55% of African-government expenditure went towards purchasing and procurement of goods and services, less than 10% of that expenditure was directed towards local suppliers.

In addition, over 80% of the government organisations participating in the study were unaware of the true origin of the goods and services that they were spending their money on, which indicates a clear lack of focus on long-term SMME and enterprise development thinking, writes Professor Douglas Boateng, Chair of the Advisory Board of the Chartered Institute of Procurement and Supply-Africa, in this month’s SmartProcurement.

Handbook: dealing with municipalities and their procurement procedures

From black economic empowerment fronting to extending gifts for officials, doing business with municipalities is still far from easy, despite the best of intentions.

A non-governmental organisation, EthicsSA, has landed a helping hand and has produced a 30-page handbook with guidelines on providing services to local government. The booklet covers rules for businesses vying for municipal contracts including how to handle irregularly awarded tenders, as well as what constitutes ethical behaviour and corruption.

5 ways to improve supplier vetting

Every day, supply chain management professionals are faced with the task of facilitating a credible and transparent networking business environment, one from which corruption, fraud, dishonesty and non-compliance are absent.

“Businesses should never jeopardise the integrity and credibility of their supply chain management processes, even in their early start-up days,” advises Rudi Kruger, general manager at LexisNexis Risk Management in this month’s SmartProcurement.

Suggesting some basic tips, Kruger sums up how businesses can streamline their supplier vetting and procurement process.

Supply chains, your customers are watching!

What would be the point of business if it were not for customers? With the growth of technology and the rapid exchange of information, consumers are taking advantage of their role in commerce. They are becoming more informed, astute and prudent with their purchasing power now more than ever before. Their particular influence on supply chain was highlighted in the KPMG 2014 Top of Mind survey, which claimed that “customers are demanding end-to-end information. They want to know who produced their products, where they came from and what they are made of”.

The survey included feedback from 469 South African consumer executives, many of whom indicated that corporate strategic priorities were directed towards supply chain and related technology between 2014 and 2015.

20 checks to evaluate proposals and bid documents

What does a compliant proposal look like?

Proposals can contain a lot of information and are the basis on which procurement decisions are made. Therefore, you must evaluate them carefully for compliance with your requirements. The following checklist, from Next Level Purchasing, can simplify your proposal evaluations and ensure that a supplier is worthy of being considered.

The website forms part of the OCPO's objective of minimising procurement-related corruption in government while, at the same time, making government's supply chain management (SCM) system more accessible and innovative.

12-point supplier quality checklist

Do you practice supplier quality management?

Supplier quality is a relative thing: all suppliers aspire to a level of quality, but some are more committed to higher quality than others.

How can you assess the degree of your suppliers’ commitment to quality? A thorough assessment requires extensive supply chain quality skills, but the following checklist, from Next Level Purchasing, can get you started.

Supply Management techniques for improved supply chain design

“Don’t even try to argue with Dr. John Gattorna that supply chains really just boil down to a system of distribution centres, procurement processes, technology tools, and transaction routes. You won’t win,” says the respected supply chain thought-leader's website.

“I argue that supply chains are driven by people and their behaviour, all along the supply chain, rather than just the hard assets and technology that most people seem to think is the case.”

Dr. Gattorna told Smart Procurement that "supply chains must be viewed as ‘living ecosystems’, whose behavioural aspects we need to better understand in order to select suppliers."

Is your small supplier an entrepreneur or an opportunist?

While “entrepreneurship” is often assumed to be directly related to “passion”, this is not necessarily the case. With an increasing number of individuals choosing to step into the entrepreneurial space as a means of financial survival, buyers need to have clarity about the driving force behind their SME suppliers. If it’s all just about the money or chasing an opportunity they’ve chanced upon, these “entrepreneurs” are unlikely to meet all your contract’s deliverables, says Shawn Theunissen, head of CSR at Growthpoint Properties and Property Point (Growthpoint Properties’ enterprise development programme) in this month’s SmartProcurement.

In search of a true Business Network

“He says he’s already got one.”

The above quote comes from Monty Python, when the King asks a French soldier to join the quest for the Holy Grail. The French soldier says he is not interested as he’s already got one. James Marland, Vice President of Network Strategy for Ariba, an SAP Company, sometimes gets a similar reaction when he talks about the business network: “We’ve already got one,” although not usually in a cod-French accent.

This “other solution” often takes the form of a portal, an EDI connection, an industry marketplace, an outsourced scanning solution or some combination. In this month’s SmartProcurement, Marland identifies the ten key characteristics of a business network.

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